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Weaving into the Fabric of a FOM: Interview with Maurice Smith

Local Government FCU is using creative means for making itself an integral part of its FOM, local government and their employees in North Carolina.

Local Government FCU began in 1983 in order to serve local and county government employees in North Carolina. It now has $840 million in assets and 162,000 members. It has 42 employees, nearly all of them in Raleigh, but serves its members all across the state. It does so because of a symbiotic relationship with the largest credit union in North Carolina, State Employees CU, which has $16 billion in assets, 218 branches and 950 ATMs. SECU allows LGFCU members (overlap of the FOMs is mainly from family members) to do business at any SECU branch or ATM, or its call center. Recently, LGFCU built and owns the first six floors of a major office building in Raleigh, which includes a convention center and office space of local government associations.

How are you working to transform LGFCU?

MS: We are working very hard to demonstrate that we are the best, most accessible, most responsive financial institution to persons who work in local government entities in North Carolina. Not only that, but that also we are the best for local government entities. We want them to understand this and to come to us when they need loans for their fire trucks or like needs. Whenever a bank makes a sales call on any of these members or entities we want them to say, “Oh, we have our own credit union.” We are making progress toward this goal.

How are you doing it?

MS: For one, with our new building. When most organizations want to increase their business, they send sales reps out into the field. Here in large part we are doing the opposite. We are attracting potential business to our headquarters. Our new building in Raleigh bears our name. We encourage local government associations to hold their conferences and conventions in our facility here. They have to come to the state capital anyway, and we are making it easy and attractive for them. What we have really done is create a kind of local government campus in the heart of the state capital. Potential members flock in. They stand in our building with our name on it and in front of our podiums with our name on them. We have a 350-seat auditorium and a roof garden for receptions. Everything in our building – materials, labor, furniture – came from North Carolina; local government people really respond to that, so it’s great goodwill for us. Moreover, many local government groups have rented office space in our building, for example, the Association of County Commissioners, the League of Municipalities, the sheriff’s association and firemen’s association and the like.

Do you concentrate on any particular segment?

MS: We are concentrating on markets where we can make a difference. Right now they are smaller communities and entities. These are currently not well served by banks. We have a good story to tell there and we find these people are responsive. We tell them we are the only financial institution in the world dedicated exclusively to local governments in North Carolina. That strikes a chord.

So brand is very important to you?

MS: Very important. All of our members go to another credit union to do business with us! So we have to reinforce our identity with the notion of who we are, whom we serve and what we do. Consequently, we put a lot of resources into brand recognition – advertising, community services and the like. And we are making good progress. For decades in local government, you would see and hear the common acronyms – for the county commissioners, the mayors’ association and the like. These are what were on everyone’s tongues. Now you see and hear our acronym – LGFCU – in discussions and forums. We are at the table because we are now a part of the table. Our main competition is community banks, and they are good. We don’t think we can compete with them on product alone; you end up chasing cheap money. But we think we can make ground with philosophy, that we exist to serve our membership, not make a profit.

How are you trying to make over the institution from the inside?

MS: With our workforce. It’s small – less than 50 people – and it is concentrated in our Raleigh office. We foster a creative environment. Lots of people will tell you to give your employees room to grow and explore; we do and try to take it to another level. We try to develop a sense of urgency and challenge them to think of themselves as not only our basic employee block but also our R&D Department. We encourage them to come up continuously with ideas. And not just to look to the credit union or banking industries for inspiration but to the entertainment, technology and commodities industries – there are things going on there that can transition to our own aims. We ask our employees to look for inspiration anywhere in order to make the financial lives of our members better and LGFCU more relevant to them. We want our employees mentally to be continually rewriting their job descriptions. We want to be the innovation leader and not get caught in price wars. We also have a twist on sales. Although we work hard at bringing people to us, we do have what we call Member Development Officers; they reach out to the people and groups we want to bring in. We are not asking them and are not training them to be sales people, to “close deals.” Rather we want them reaching out to people and building relationships.

Do you have to work hard at motivating employees?

MS: Motivating is the easiest thing I do. We have tried to create an environment that will attract motivated, creative people. We offer a good package and people come to us. We actually have here a bunch of pollyannas and do-gooders who think they can change the world. They don’t argue products over the water cooler; they argue credit union philosophy and how best to implement it. I love to see it, though it makes me sometimes try to keep people on message and to concentrate rather than take on all ills at once. As for transformation, we accept the notion that we have to change if for no other reason than to keep up with our membership and market. Before our Strategic Planning Session we are going to spend a lot of time thinking about how we should evolve as an organization. We don’t know the answers now, but we are ready to hunt for them and change accordingly.